Vodafone extends contract to manage Qatar affiliate

A Vodafone logo is seen on a mobile internet dongle connected to a laptop in London November 9, 2010.

Reuters/Suzanne Plunkett

DUBAI (Reuters) - Vodafone Group (VOD.L) has extended a contract to manage loss-making affiliate Vodafone Qatar VFQS.QA until 2018 and will take a smaller percentage of its revenues under the new terms.

Vodafone, which owns 23 percent of Vodafone Qatar, took over managing it in June 2008 for an initial period of five years.

"The new agreement sees the fee payable to Vodafone reduced (as a percentage of revenue) to reflect the increased scale of the business and the transition to a fixed and mobile operation," the companies said in a joint statement on Wednesday.

Previously, Vodafone Qatar paid 5 percent of its revenue in management fees, but this has been cut to a maximum of 3.5 percent.

Vodafone Qatar also published second quarter results, in which the mobile phone company reported a second-quarter net loss of 121.7 million riyals for the three months to September 30, according to Reuters' calculations.

That compares with a loss of 115 million riyals ($31.58 million) in the year-earlier period. The company's financial year starts on April 1.

Vodafone Qatar, which ended Qatar Telecom's QTEL.QA (Qtel) domestic monopoly in 2009, has yet to make a quarterly net profit.

Second-quarter revenue rose to 345.5 million riyals, from 299.7 million riyals a year ago.

Capital expenditure in the six months to September 30 rose 20 percent to 146 million riyals ahead of the company's launch of fixed line services later in the financial year.

Vodafone Qatar began post-paid contract services in June, which the operator hopes will help woo subscribers from Qtel and improve margins. Customers on post-paid phone contracts are typically wealthier and spend more on telecoms as well as being less likely to switch operators.

Vodafone Qatar had 936,300 mobile customers as of September 30, up 7 percent from the previous quarter, giving it a 30.5 market share.

Average revenue per user (ARPU), a key indicator for telecoms companies, was 118 riyals in the six months to September 30, up 7 percent year-on-year.